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Contract for difference (CFD) trading

CFDs are very similar to single-stock futures, but with a few important differences.

Their similarities are gearing and an ability to short the share.

The differences are that CFDs are one per contract whereas SSFs are 100 shares per contract. Also, CFDs do not expire, whereas SSFs do expire and, if you are holding at expiry, you will have to roll over into the next contract (at a fee). Also, the SSF has the interest built into the price, whereas the CFD trades at the spot price of the share and interest is charged daily and deducted from your account. Importantly, CFDs are NOT exchange traded, so you are taking counterparty risk. Counterparty risk is the risk that, if the provider goes bankrupt, you have no protection. You would have protection if you were trading an exchange-traded product such as an SSF.

​Exchange-traded CFDs

However, an exchange-traded contract for difference traded and listed on the JSE is cleared by an appointed clearing house, eliminating the counterparty risk traditionally associated with CFDs that are NOT exchange traded. ​​